New scheme good; beware of tardy execution
The NDA Government's new crop insurance scheme ticks all the right boxes, and has the potential to become one of the most important reform measures responding to the changing contours of the Indian farm sector. Dealing with the vagaries of nature has always been a professional hazard for farmers, but in recent times their troubles have grown apart from changing weather patterns and extreme weather events that are happening with increased frequency, there are also structural changes in the sector that need to be factored in. For example, more farmers are diversifying their produce by turning to horticulture and commercial crops, which bring more profit but also entail greater risks, be it in terms of pest attacks or price volatility. However, few farmers have the safety net necessary in these cases. As all these factors come together, it is perhaps no surprise that stories of farmer suicides and agrarian distress in general have become so commonplace that they barely make it to the inside pages of daily newspapers. One crop insurance scheme, no matter how successful, cannot change this whole scenario, but it can make a perceptible difference. It is in this context that the Pradhan Mantri Fasal Bima Yojana must be viewed.
The scheme has three main benefits: First, the premium to be paid by the farmer is low — just 1.5 per cent on Rabi crops, two per cent on Kharif crops and five per cent on commercial or horticultural crops. Second, unlike in some previous schemes, there is now no capping on the premium. This means that farmers will get the full sum that has been insured. Third, the scheme also takes into account multiple localised risks such as hailstorms and landslides, as well as post-harvest risks. In fact, it even covers losses incurred when farmers are not able to sow their crops because of inclement weather conditions. If implemented effectively, the PMFBY, which will replace the existing National Agricultural Insurance Scheme and the Modified NAIS, should bring about 50 per cent of the country's total crop area of 194.40 million hectare under coverage. Currently just about 25 per cent to 27 per cent is under the safety net. Of course, the insurance scheme will increase the financial burden of the Government, and towards this end, the necessary Budget allocations have already been made.
In assessing the new scheme, it is important to keep in mind that many of the similar schemes in the past had failed to take off. For example, the Comprehensive Crop Insurance Scheme launched in 1985 ran only till 1999, when it was replaced by the National Agricultural Insurance Scheme. In between, there was the Experimental Crop Insurance Scheme, which was launched and closed in just one year. Many factors, from rampant corruption to delayed payments, were responsible for these failures. Whether the new scheme will have a different fate, only time will tell. But for now, one can take heart from the fact that it does incorporate some of the lessons learned from past experiences: For example, smart phones and remote sensing technology will be used to take pictures during crop-cutting, so that farmers don't have to wait for actual yield data, which takes time to be collated and results in delayed payments.